BAKU, Azerbaijan — A significant international dialogue regarding climate change is taking place over the next two weeks, with critical implications for an increasingly warm world.

The challenge of addressing the intensifying effects of climate change—manifested through extreme heat, floods, droughts, and storms—poses a financial burden estimated in the trillions of dollars. Reports and experts indicate that developing nations lack the necessary funds for adaptation and mitigation efforts. As United Nations climate negotiations commenced in Baku on Monday, a central topic of discussion is who will contribute financially to assist these poorer countries and in what capacity.

The negotiating baseline stands at the $100 billion per year promised to poorer nations as part of a 2009 agreement, a promise that has seen limited fulfillment. However, many experts, alongside officials from struggling nations, argue that the actual need exceeds $1 trillion annually.

“It’s a high-stakes situation,” stated Bill Hare, CEO of Climate Analytics and a physicist. “The destiny of our planet significantly hinges on the actions we can successfully implement within the next five to ten years.”

This year’s Conference of the Parties (COP29) isn’t expected to draw as much attention as its predecessor, with 48 fewer world leaders intending to participate. Notably absent are representatives from the two leading carbon-emitting countries, China and the United States. Experts warn that if financial negotiations are unsuccessful in Baku, it could undermine critical discussions set for 2025.

Money discussions present a difficult landscape as two of the wealthier nations that are anticipated to provide financial support—namely the United States and Germany—are undergoing significant shifts in government leadership. Although the U.S. delegation is expected to reflect the Biden Administration’s stance, the potential reelection of Donald Trump, who minimizes the significance of climate change and typically opposes foreign aid, raises concerns about the fulfillment of U.S. commitments.

At the core of the discussions is climate financing. Experts assert that without sufficient funding, the global effort to combat warming would be significantly hindered, and many countries may struggle to meet their existing carbon reduction targets or develop new ones for the upcoming year.

“If the financial challenges are not resolved, the climate crisis will remain insurmountable,” claimed Pablo Vieira, a former Colombian deputy climate minister and current leader at the NDC Partnership, which aids nations in reaching their emission-reduction objectives.

Countries need to cut carbon emissions; however, this transition is impossible without the financial resources to phase out fossil fuels, experts argue. Vieira highlighted the frustration among poorer nations, noting that despite their limited contribution—only 4% of global greenhouse gas emissions coming from the 47 poorest countries—they are urged to take more action against climate change.

Conversely, around 77% of greenhouse gas emissions originate from G20 nations, many of which are currently implementing policies to reduce pollution. “Rich countries have accrued their wealth through pollution,” noted Ani Dasgupta, president of the World Resources Institute.

The financial discussions center around three fundamental areas: assisting impoverished nations in transitioning from fossil fuels to sustainable energy; helping them adapt to the adverse effects of climate change, such as rising sea levels and increasing storm intensity; and compensating vulnerable nations for the damages wrought by climate change.

“Failing to meet financial goals is tantamount to signing a death warrant for numerous developing nations,” warned Chukwumerije Okereke, director of the Center for Climate Change and Development in Nigeria.

Since 2022, total climate financing has approached $1.5 trillion, yet only a meager 3% of this funding has been directed towards the least developed countries, observed Michael Wilkins, a business professor at Imperial College’s Centre for Climate Finance and Investment in the U.K.

“The Global South has continuously faced disappointment due to broken promises and unfulfilled commitments,” said Sunita Narain, director general at the Centre for Science and Environment in New Delhi.

“Finance is the crucial element motivating all forms of climate action,” stated Bahamian climate scientist Adelle Thomas, who serves as the adaptation director at the Natural Resources Defense Council. “Without financial backing, developing nations will find it exceptionally challenging to take meaningful steps.”

This issue also reflects matters of equity and self-interest, Thomas and other experts emphasize. Providing assistance to poorer nations in their decarbonization efforts is not a matter of charity; rich nations also benefit when every country actively reduces emissions, as a warming planet poses risks to all.

Compensating nations for climate-related damages and aiding them in preparing for future impacts is a question of justice, Thomas stated. Nations, particularly small island states, are disproportionately affected by rising sea levels and extreme weather events, despite their minimal contributions to the crisis. Thomas recounted the destruction caused by Hurricane Dorian in 2019, stating that “the only thing remaining of my grandparents’ home was a toilet.”

The aforementioned trillion-dollar requirement is approximately half of what the globe invests yearly in military expenditures. Some advocate reallocating fossil fuel subsidies to support climate finance, which are estimated to range from $616 billion to $7 trillion annually, depending on the source.

“When it comes to finding funds for various issues, including conflict, we seem to manage,” reflected Inger Andersen, Executive Director of the United Nations Environment Programme. “This is arguably the most significant conflict we face.”

A report by a U.N. climate finance committee assessed funding needs across 98 nations, calculating amounts ranging from $455 billion to $584 billion annually.

Funding sources will not solely include direct aid from one government to another. Additional contributions are expected from multinational development banks, such as the World Bank, alongside private investment, as developing nations confront a staggering $29 trillion in debt.

Andersen indicated that a sixfold increase in investment is essential to keep global warming within 0.2 degrees Celsius (0.4 degrees Fahrenheit) above current levels, the ambitious target established in 2015.

The gap between well-financed initiatives and present commitments could lead to an estimated half-degree Celsius (0.9 degrees Fahrenheit) reduction in future warming, according to calculations by Andersen’s agency. Experts warn that enhancing efforts to further decrease warming will require greater financial resources.

Identifying who will cover these costs remains a contentious issue. Long-standing climate talks have differentiated between nations based on 1992 standards, categorizing them as developed or developing. This framework imposes the expectation that wealthy nations, like the United States, should provide financial assistance to poorer counterparts. However, changing economic circumstances question this division, particularly as China, the world’s largest carbon emitter, has exponentially increased its GDP per capita.

Developed countries desire that those emerging economies now capable of contributing financially should also participate as funding donors; however, these nations resist such responsibilities, according to Alden Meyer, a veteran analyst of climate negotiations at E3G. “The landscape around an enhanced climate finance framework is fraught with challenges,” Meyer concluded.